Exit, Voice, and Service Delivery for the Poor

Inspired by Jeremy Adelman’s wonderful biography of Albert Hirschman (Worldly Philosopher: The Odyssey of Albert O. Hirschman, Princeton University Press, 2013), I’ve read and reread Hirschman’s masterpiece, Exit, Voice and Loyalty: Responses to Decline in Firms, Organizations, and States, (Harvard University Press, 1970) and his follow up essay “Exit, Voice, and State” (reprinted in The Essential Hirschman, Princeton University Press, 2013). Although Hirschman produced these works over 40 years ago, his simple model of flight (“exit”) or resistance (“voice”) in the face of unsatisfactory economic, political or social conditions remains highly relevant for policymakers and development practitioners concerned with eliminating extreme poverty, reducing inequality, and improving basic services accessible to the poor.

Hirschman’s ideas provide much cause for reflection within the context of present-day Indonesia. Indonesia has enjoyed over a decade of macroeconomic stability and economic growth. From 2000 to 2011 GDP expanded by 5.3 percent per year, and the official poverty count halved from 24 percent in 1999 to 12 percent in 2012. This period also saw notable improvements in health and education. Access to education has become more widespread and equitable. Girls are now as likely as boys to graduate from secondary school. In health, Indonesia is on track to meet Millennium Development Goals for reducing both the prevalence of underweight children under five years old, and the under-five mortality rate.

While these achievements are laudable and should not be overlooked, a recent wave of education and health data suggests that despite sustained economic growth a significant number of Indonesians are not getting smarter or healthier. Between 2003 and 2009 Indonesia saw only a modest improvement in its PISA score for reading, while its scores in math and science declined. Analysis of recent national health survey data indicates that Indonesia’s maternal mortality ratio (MMR) may be as high as 359 per 100,000 live births, and has actually increased from the 2010 level of 220 per 100,000 live births. To put this number in some perspective, Haiti, a much poorer country, has an MMR of 350 per 100,000 live births. It’s simply unconscionable that a country as rich as Indonesia performs worse than some low income countries on a key health indicator like maternal mortality.

So what’s going wrong? Many analysts would argue that Indonesia has implemented sound macro-level policy and spending reforms over the past decade. In 2001 the country decentralized responsibilities for delivering basic public services to district governments. A few years later the electoral system was reformed such that provincial and district governors were directly elected, thereby, in theory, bringing decision-making authority and electoral accountability closer to local communities. In 2005 a law guaranteeing free basic education was passed, and the Indonesian government is required by law to spend 20 percent of its annual national budget on education. Also in 2005 the government instituted a health insurance program for the poor and near poor, and in 2014 plans to implement universal health care coverage. Overall, national and local government spending on health and education services has doubled since 2001. While Indonesia still wastes billions on fuel subsidies that mostly benefit wealthier Indonesians, and spends a small share of GDP on health relative to other countries in East Asia, few would argue with the nature and direction of the decentralization, health, and education reforms implemented since the late 1990s.

So if bad policies are not the primary problem, where does the blame lie? An increasingly popular explanation for Indonesia’s disappointing health and education performance is an absence of accountability between doctors, nurses, teachers and the communities that they serve. This diagnosis is by no means unique to Indonesia. A deluge of donor-supported interventions, encompassing community scorecards, service delivery action plans, local health and education forums, community complaints centers, and so on, have been implemented throughout the world, as practitioners became fixated on the “short route to accountability” defined in the World Development Report 2004: Making Services Work for the Poor (WDR 2004). A similarly broad variety of interventions has been tried throughout Indonesia over the past decade. In Kekiri village, located on the island of Lombok in West Nusa Tenggara province, I’ve had the privilege of interacting with community health volunteers who spent years working to convince managers at their community health clinic, and later the head of the district health office, to sign an MoU guaranteeing routine hours of operation and standards for the delivery of basic services. Other Kekiri community members confirmed that they no longer had to worry about being denied services under the government’s health insurance program for the poor and near poor mentioned earlier. There are no doubt numerous examples of such hard fought successes in villages throughout the country, but we simply don’t have the evidence needed to make judgments as to whether such local expressions of “voice” in the face of poor basic service delivery improves high level outcomes, or are scalable to the diverse local conditions that exist across this vast archipelago.

This is where Hirschman’s work becomes relevant. In Exit, Voice, and Loyalty, Hirschman focuses primarily on people’s responses to declining performance in private sector firms, and levies a critique of economists’ tendency at the time to dismiss “voice,” or protests and other forms of collective action, deemed to be the exclusive realm of political scientists, as unrealistic and unnecessary. The prevailing view he aimed to challenge was that the market naturally creates conditions for “exit” that in turn provide sufficient incentives for firms to correct deficiencies and improve performance. In “Exit, Voice, and State,” Hirschman shifts his focus to people’s responses to poorly performing governments. Hirschman’s ideas no doubt influenced the WDR 2004 authors, as they adapted the exit-voice framework to a model in which government, local service delivery facilities, and citizens are the key actors in intertwining accountability relationships. The WDR authors’ apparently felt that the “voice” model, which they articulate as the “long route to accountability,” or rewarding or punishing performance through direct elections, and the “short route” described above, had more promise in improving service delivery for the poor, as opposed to exit. Hirschman’s work however, suggests that the “voice” preference should be treated with caution in contexts like that of present-day rural Indonesia.

In “Exit, Voice, and State,” Hirschman references the work of enlightenment thinkers like Rousseau, and 20th century anthropologists to argue that the primary human response to harmful political or social conditions has been exit. He then cites the mass migrations from countries like Germany and Ireland to the United States in the second half of the 19th century, which served as a safety valve for beleaguered governments as radicals and reformers were among those who migrated. This safety valve eventually created the conditions needed for those governments to feel secure enough to introduce reforms. The migration precedent is highly relevant for the Indonesian context. Indonesians for some time have been undertaking their own mass exodus from poor rural villages to wealthier cities and to employment opportunities abroad. The scale and pace of this migration are impressive. Indonesia’s urban population increased from 17 to 54 percent between 1971 and 2010, and is projected to increase to 67 percent by 2025.

It is this dynamic of mass, rapid migration that makes me skeptical of investing in interventions aimed at institutionalizing “voice” in relationships between rural communities, schools and clinics, and local governments. This is because people from rural communities that have the time and resources available to devote to activities like monitoring teacher or doctor performance and meeting regularly to discuss problems are also the people most likely to migrate out of the community. Those that remain are often too poor to engage in the collective action needed to hold local service providers accountable, or are part of the local elite that have the least incentive to promote change. Rural to urban migration is no doubt a factor influencing the findings from the third Local Level Institutions study[1], which finds that, as compared with conditions in 1998, people are able to solve fewer problems through independent collective action within the village. These trends don’t bode well for the likelihood of success of the often technically demanding, time- and resource-intensive accountability interventions that are designed for rural parts of the country. Under such circumstances is the short route to accountability really just a dead end? Without a more robust evidence base it’s hard to make the case for investing more in institutionalizing citizen voice in service delivery in rural Indonesia. A cash transfer program, that, for example, subsidizes the costs of migration, such as obtaining new ID cards and finding decent housing before moving, could be more effective at reducing poverty. We simply don’t know.

Would a better course of action be to invest instead in programs that, as Hirschman put it, reduce “inequality in access to exit” from rural poverty and poor quality basic services? The Indonesian government has done just this in the case of its National Community Empowerment Program (PNPM). Since 1998 it has invested over $8.5 billion in the rural version of the program, which has enabled rural communities to build the roads and bridges that were too costly or difficult for national and now local governments to build. Recent evaluation findings showed that these investments increased consumption amongst the poorest households, and increased the likelihood that poor families would escape poverty. If the new village law, which was passed by parliament in the last week of December 2013, is implemented properly, there’s a high likelihood that fiscal transfers from the national to the village level, and accompanying systems for community participation and oversight in the use of these resources, will be institutionalized within government and no longer project-specific. Under this optimistic scenario, the opportunities for exit from rural poverty and poor service delivery should continue to expand in the years ahead, as communities will receive the resources needed to close the gap in rural infrastructure that exist in many parts of the country.

At the same time, it’s important to bear in mind that not all of the poor who move to cities are able to escape poverty. When people arrive in cities they may be faced with a situation that is only marginally better in terms of access to quality basic services. They may struggle to obtain the legal documents required to participate in social assistance programs, and the public schools and hospitals available at a low cost are often of poor quality. Wealthy Indonesians exercise the exit option by educating their children in Australia, the US, and elsewhere, and by seeking health care at hospitals in Singapore. But the exit options for the urban poor are far more limited. If government chooses the path of reducing sources of risk and vulnerability during rural to urban migration, efforts to institutionalize citizen voice in basic service delivery must not be neglected in urban and peri-urban areas. While the social fabric, and therefore the capacity to act collectively, is often weaker in newly formed urban communities, exit from poor performing schools, clinics, and local governments is simply not an option for most people. In these settings the argument for investing in institutionalizing accountability in local service provision is much stronger.

Hirschman’s exit-voice model is astounding in its simplicity, flexibility, and applicability to a range of political, economic, and social contexts. It has been used to make important theoretical and operational innovations as catalyzed through the WDR 2004. As commemorations for the 10th anniversary of the WDR 2004 commence, I would urge development practitioners and researchers to take another page from Hisrschman’s repertoire: self-critique. That is, we should revisit, scrutinize, critique and refine the WDR 2004 model for improved accountability between the poor, governments, and service providers, and in doing so contribute to a new generation of programs and approaches that are effective at making basic services function for the poor.

[1] Anna Wetterberg, Leni Dharmawan and Jon Jellema. 2013. The Local Level Institutions Study 3: Overview Report. PNPM Support facility, World Bank. Jakarta, Indonesia.Photo by the author. It shows a combined village health post (Poskesdes) and pre-school in the neighboring village of Mambalan built with funding from PNPM-Rural. The banner says "assisted deliveries free of charge" (menerima persalinan gratis).

Comments

Robert: Thanks very much for launching this discussion, which would--as you say--be valuable in the WDR2004's 10th anniversary conference on February 28-March 1st. You are right that we didn't emphasize the "exit" option much in the 2004WDR, and its importance has become more apparent in the last decade. Two comments. First, efforts like community scorecards and local health and education forums are not examples of the "short route of accountability", which is when citizens directly hold service providers accountable. Your examples are all part of different legs of the long route of accountability--either "voice" or "compact". What citizen report cards, for example, do is help citizens express their voice to politicians who, in turn, may hold providers more accountable. In fact, the only pure short route is the market, where citizens hold providers accountable without the intermediation of the government. Second, your point that voice interventions may have limited impact is correct, although another reason (other than exit) is if the underlying politics in the country is dysfunctional. This is the point Stuti Khemani, Mike Walton and I make in our recent paper in the World Bank Research Observer (http://wbro.oxfordjournals.org/content/early/2013/10/09/wbro.lkt008.short?rss=1). It may be good to explore the relationship between these two (Hirschmanian) explanations at the conference. Regards, Shanta

Shanta: thank you for these comments and for the clarification as to where certain accountability tools fit within the framework of the short and long routes to accountability. Thank you also for sharing the paper. I hope that there is indeed opportunity to explore Hirschman's ideas at the upcoming conference, and more generally to a lively discussion and debate.